Reserve Bank of Australia

Income tax will continue to rise, despite $300b of cuts

Income tax will continue to rise, despite $300b of cuts

Oct 29, 2019 — 4.11pmIncome tax will continue to increase as a proportion of disposable household income over the next decade – and as a drag on consumption – despite legislated tax cuts worth $302 billion over the same period.An analysis by Macquarie Securities economists shows that without the tax cuts, income tax would jump…


Low wage growth ‘not result of broken system’

Low wage growth ‘not result of broken system’

Labor and unions have used the argument to claim the workplace system has broken and support calls for a return to centralised wage fixing or industry-wide bargaining.While accepting employees’ earnings have lagged productivity in the past five years, Mr Kirchner argued the long-term relationship remains intact.He said that when calculating real wage growth using producer…


Interest rates are a key driver of house prices, an RBA paper says

Interest rates are a key driver of house prices, an RBA paper says

“We find that low interest rates (partly reflecting lower world long-term rates) explain much of the rapid growth in housing prices and construction over the past few years.”However these unequivocal statements are, to a degree, at odds with what governor Philip Lowe told The Australian Financial Review Business Summit last week.”The origins of the current…


The Australian dollar is poised to rebound, says BofAML

The Australian dollar is poised to rebound, says BofAML

The Aussie dollar has tumbled more than 13 per cent from a January 2018 high above US81¢ through year end.”We remain confident that a likely recovery in China later this year will lead to medium-term AUD appreciation,” BofAML’s Mr Sinha said in a note.The bank has the local currency reaching US74¢ in the June quarter,…


Is there any upside to cutting rates from here?

Is there any upside to cutting rates from here?

RecastingMacquarie economist Justin Fabo is one of many who have recast their forecasts for monetary policy and now believes there will be two cuts this year, with the first potentially coming as soon as May.While the domestic and global economies have weakened, he doesn’t believe they have “fallen in a hole”. Rather, he thinks easier…


RBA’s Philip Lowe takes house price falls in stride

RBA’s Philip Lowe takes house price falls in stride

Lowe explained that over the five years to 2017, Australian house prices rose almost 50 per cent. Since then, they’ve fallen 9 per cent, bringing them back to mid-2016 levels.Lowe ran through some of the reasons for this.The biggest part of the problem is supply; population growth took off in the early 2000s and it…


‘Train smash for the auction system’

‘Train smash for the auction system’

“It’s bad, not worse,” according to Morgan Stanley analysis. “The downside of accelerating declines looks to have abated for now, but nothing (in February data) suggests a trough in prices in 2019.”That means falling property prices will continue to be a drag on consumer spending as the wealth effect goes in reverse, which means consumers…



Inflation data won’t alter RBA’s interest-rate story

Inflation data won’t alter RBA’s interest-rate story

A rate rise this year appears unlikely. But the approximate 50 per cent odds financial markets are pricing in for a rate cut by late 2019 seems overly pessimistic.The right directionThere is no escaping the disappointment that underlying inflation has run below the RBA’s target of 2-3 per cent for a record three years.Nevertheless, inflation…


Housing market confidence sinks to new low: NAB

Housing market confidence sinks to new low: NAB

The share of investor home loans also dropped to its lowest level in almost a decade, falling 22.6 per cent over the year to November – or 2.5 per cent over the month – new ABS figures show. “The crackdown on credit and tighter lending restrictions also continued playing out in new and established housing…